$COTY bulls double their money

Option traders racked up gains in Coty today for the second time in less than a last week.

On Monday, Investitute’s proprietary programs cited the purchase of 5,300 March $21 calls for $0.45 to $0.55 with shares at $20.31. These were clearly new positions, as open interest in the strike was a mere 66 contracts before the trades occurred. Investitute’ co-founder Jon Najarian cited the unusual activity at that time on CNBC’s “Halftime Report.”

Those calls traded for $0.94 this afternoon, more than doubling their original purchase price. The stock rose 5% at the same time, illustrating the kind of leverage that can be achieved with options. It was the second winning trade in Coty posted on Investitute in the last five sessions.

Long calls lock in the price where a stock can be purchased, gaining with a rally and providing leverage to the underlying shares. The contracts can quickly lose value if the stock stalls or pulls back but also carry less risk than owning the shares themselves.

COTY was up 3.36% to $21.25 today. The cosmetics and fragrance company, which has expanded into other businesses, topped quarterly expectations last Thursday morning.